Guest blog by Claire Owen-Jones, founder of Loud and Clear Accounting – a Xero Bronze partner that recently took home New Bookkeeping Practice of the Year at the 2016, LUCA Awards.
In the way of background information, I’m a member of the AAT (Association of Accounting Technicians). I’ve been fully qualified for about eight years and a member for around five. As part of my practicing licence – I am a licensed accountant – I can also do bookkeeping. This means that there is absolutely no reason for me to also be a member of ICB (Institute of Certified Bookkeepers).
However, as soon as I decided to set up Loud and Clear Accounting, I sat the ICB exams and became a certified bookkeeper. There are a number of reasons why this doesn’t make sense: Pay two annual subscriptions; pay for two practice licence fees; two CPD registers to complete etc.
But from an emotional point of view it makes absolute sense. I needed to prove to myself, and to my clients, that I can do bookkeeping to the highest level. Just because I’m an accountant, it doesn’t mean that I can bookkeep. They are two different skills.
Rory Sutherland, who I always think of when it comes to behaviour economics, often talks about taxi drivers. To paraphrase him: Being a taxi driver is often considered a low skill and to a certain extent, low trust occupation. However, in London to obtain your taxi driver licence/badge you must spend two years learning “The Knowledge”. Some people argue that this is a barrier to entry and also unnecessary as we now have satellite navigation.
Rory argues that “The Knowledge” is important, not because of the actual knowledge itself but because of the sunk cost. Anyone who has invested their time and money for two years to obtain their licence is very unlikely to risk this in order to scam a passenger out of a couple of quid.
Here’s why, when you decide that you need a bookkeeper, I think you need to choose someone who’s a member of the ICB:
As you may, or may not know, anyone can call themselves an accountant or bookkeeper. Unlike dentist, doctor, lawyer or solicitor, the titles accountant and bookkeeper are not protected. This means that anyone could set up an accountancy practice tomorrow, should they wish.
So, if you can call yourself a bookkeeper and set up in practice later on today, why would you invest a couple of years of your life and a nice chunk of your income into taking the ICB’s exams, especially knowing that you will need to achieve 95% just to pass?
It’s the sunk cost – just like a taxi driver taking ‘The Knowledge’. Any bookkeeper who is willing to take exams is showing a high degree of commitment and investment into their profession. Why would they do a shoddy VAT Return and vanish, not returning your calls or giving you their workings? They’ve got too much to lose.
With the cloud accounting software like Xero in the market making bookkeeping appear simple and accessible, it gives the impression that bookkeeping is easy. But then so is driving from A to B. You type your journey into a sat nav and off you go. But lorries still end up in rivers. Cars still find their way down cycle paths.
Taking the time to invest in the knowledge shows dedication. So, if you do decide that you need a bookkeeper – choose one that has a bookkeeping qualification. Otherwise all you’re doing is getting into an unlicensed taxi.